Developing sustainable resale models

Welcome to the sustainability column that takes a look at what retailing is doing to address the issues in its industry. Much of the ongoing focus will be on fashion but not exclusively.

This month’s column explores some of the issues around resale that need to be considered if this potentially crucial part of the industry is to have longevity and make a real long-term impact on the sector.

We are very pleased to bring this series of columns to you with the much appreciated support of our new sponsor Prolog Fulfilment.

There is no doubt that resale is enjoying significant growth, with the market for pre-owned goods reaching $100 billion in 2022 and it is forecast to hit $250 billion by 2027, according to the Ellen MacArthur Foundation. This means, at that point, it would account for almost a quarter (23 per cent) of total retail sales.

Against this backdrop the clothing brands have to work out how they handle this ongoing structural change in their industry. To this end many of them have been experimenting with various ways to get involved in the circular economy.

This has involved them investigating a variety of initiatives including setting up their own marketplaces on their websites for customers to sell through, working with recognised third-party platforms such as The Real Real and ThredUp, tying-up with the peer-to-peer marketplaces including Depop and Vestaire Collective, or using the technology of the likes of Trove and Reflaunt, which handles all the back-end infrastructure for trade-in and resale.

There have been accusations that many of the efforts to date by the brands has been merely PR bluster or greenwashing rather than a genuine effort to change their business models for the long-term and create a sustainable new way of working with resale as an integral part. We could argue that a true move towards sustainability will involve brands seeking to shift some of their revenues away from new production and into resale.

At the heart of this is likely to be a strategy whereby the brands generate extra revenues from existing products by selling them multiple times. This moves them away from constantly having to make new products, which causes the majority of the negative environmental impact within the fashion sector.

For this to work at any scale it is likely the resale aspect will have to be closely integrated within the brand’s existing business of selling new products. Having the resale element at some sort of arms’ length – via various marketplaces – might simply result in insufficient traction for the brand and ultimately disappointing revenue generation.

Another key element in the circular economy moving forward is for brands to better communicate to their customers about their resale propositions. According to the recently released Brand Resale Index from Trove, which analysed the resale efforts of 40 major brands, only 35% of these companies promote their resale programmes through social media and only 20% promote it through email.

This is disappointing because wider awareness would undoubtedly help trigger an essential aspect of the resale market – the unlocking of the $2.1 trillion of branded goods that are sat in people’s wardrobes. Only around six per cent of all potentially re-saleable fashion was resold in 2020, which leaves this massive multi-trillion dollar stockpile of items stuck in homes.

To further help push things ahead brands need to give shoppers easy-to-use, seamless trade-in options. For brands with stores this can include utilising their multi-channel capabilities and allowing trade-in at physical outlets as well as via mail.

With such things in place then resale not only presents itself as an opportunity for people to earn some money from their unused items lying around at home but it would get the ball truly rolling on resale volumes. Brands could then start to see some more meaningful revenues being generated from the reselling of non-new goods. If they have control of this secondary resale market, with it fully integrated into their existing business, then they will begin to see how it can be used as a fully effective offset to them generating less revenues from the sale of new products.

According to Andy Ruben, CEO of Trove, the tipping point when brands would regard resale as being a truly sustainable element of their businesses and acknowledge that they are working with a new operating model is when it hits 20% of their total sales. Some of the more progressive sustainable clothing brands are already trading around this figure. For other brands looking to join them the key priority has to be around ensuring that their choice of resale programme is based on its robustness and long-term sustainability, and that they also shout about its existence.

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